Hua Jun Zhao Accused of Economic Spying for China

Wisconsin Researcher Accused of Economic Spying for China

By Marie Rohde & Andrew Harris - Apr 2, 2013 1:51 PM PT

A Medical College of Wisconsin researcher was charged with economic espionage for stealing a patented cancer-research compound to give to a university in China.
Hua Jun Zhao, 42, may have stolen the compound from a Medical College office in Milwaukee and taken steps to deliver it to Zhejiang University, according to a Federal Bureau of Investigation agent’s affidavit in support of a criminal complaint dated March 29.

 

 Hua Jun Zhao may have stolen the cancer-research compound from an office at the Medical College of Wisconsin and taken steps to deliver it to Zhejiang University in China. Source: Milwaukee County Sheriff's Office via Bloomberg

A copy of the complaint against Zhao was obtained today from the office of Milwaukee U.S. Attorney James L. Santelle.
“There is probable cause to believe that Hua Jun Zhao has committed the crime of economic espionage,” FBI Special Agent Gerald Shinneman wrote in his nine-page affidavit.

Zhao joins a Motorola Inc. engineer and a researcher at Dow AgroSciences LLC who, in separate cases, have been accused by the U.S. of economic espionage or stealing on behalf of Chinese entities.
Zhao is in the Milwaukee County Jail and no bail has been set, said Fran McLaughlin, a spokeswoman for the Milwaukee County Sheriff’s Department.

Hearing Set

Dean Puschnig, a spokesman for Santelle, declined to comment on the status of Zhao’s case. Theft of trade secrets to benefit a foreign government is punishable by as long as 15 years imprisonment. A preliminary hearing for Zhao is set for April 11 before Magistrate Judge Patricia Gorence in Milwaukee.

Juval Scott, a federal public defender representing Zhao, said in a phone interview today that her office had no information beyond what is contained in the criminal complaint.

“We’re looking forward to discovery,” Scott said. “This is an unusual case. Nationwide there have only been a few cases.”
Hanjuan Jin, a former Motorola software engineer, last year was sentenced to four years in prison for stealing trade secrets from the company. While accused of planning to share that information with a company that had ties to the Chinese military, she was acquitted of economic espionage.

A former Dow AgroSciences researcher, Kexue Huang, was sentenced to seven years and three months in federal prison in 2011 after pleading guilty in two consolidated cases to stealing trade secrets to benefit a Chinese university.

Three Bottles

Zhao had been conducting pharmacology research at the university as an assistant to Dr. Marshall Anderson, according to Shinneman’s affidavit.
On Feb. 22, Anderson reported to university security that three bottles of a powdery compound identified only as C-25, for which he held the patent, had disappeared from his office, the FBI agent said. The vials were worth about $8,000, Shinneman said.

A review of security video showed Zhao was the only person to enter or leave Anderson’s office around the time the bottles disappeared, according to the affidavit.
University security also learned Zhao had been in China from December to February and stated on his resume that he was an assistant professor at Zhejiang University, Shinneman said.
Zhao also claimed on the website ResearchGate that he had discovered a cancer-fighting compound and wanted to bring it to China, the FBI agent said.

Plane Tickets

Federal agents, with a search warrant for Zhao’s residence on March 28, found a receipt for a package sent to his wife in China a month earlier, together with plane tickets for a flight from Chicago to China, scheduled to depart today, Shinneman said.

At a detention hearing yesterday in Milwaukee, Assistant U.S. Attorney Tracy M. Johnson told Gorence that Zhao had sold his car prior to his arrest. Johnson told the judge that in addition to his wife, Zhao has a son living in China.
While Zhao may not have known about the case, “he had an inkling there was a problem,” Gorence said at the hearing.

The case is U.S. v. Zhao, 13-mj-00220, U.S. District Court for the Eastern District of Wisconsin (Milwaukee).

To contact the reporters on this story:
Andrew Harris in the Chicago federal courthouse at aharris16@bloomberg.net

Marie Rohde in Milwaukee at fmarierohde@gmail.com

To contact the editor responsible for this story:
Michael Hytha at mhytha@bloomberg.net